Biform Bargaining Games with Incomplete Information

This research project is funded as an individual grant by the Deutsche Forschungsgemeinschaft.

Background

Biform games describe situations in which parties prepare non-cooperatively for negotiations that will end cooperatively with a binding agreement. More precisely, they choose their preparation (for instance, investments into research, location of production plants, etc.) individually and knowing that after all decisions have been made their profits (from joint research, joint production, etc.) will be allocated according to some cooperative rule. These games have found their way into the economic theory literature in the early 2000’s. Since then, they have been investigated in setups with complete information: cooperative solutions are applied to classical bargaining problems or games with transferrable utility, whereby a non-cooperative game is defined in which players decide how to prepare for the bargaining problem. This project will investigate situations with incomplete information. As a motivation one might consider the design of marine protection areas (MPA’s): involved parties can (non-cooperatively) prepare for negotiations, but even if an MPA is implemented, its cost and benefits to these parties are highly uncertain. A crucial difference between biform games with complete and incomplete information is that in the latter case, players can use the non-cooperative stage to affect each other’s beliefs about the state of the world: they might run conduct research on fish migration, on natural resources under the see, on consequences of climate change; and they might design their research in a way that support their claim in the bargaining situation. Hence, there is a huge scope of multi-player information design that needs to be analysed. After the theoretical framework has been developed and analysed, it will be applied to international negotiations for MPA’s and fishing quota. To provide a fruitful investigation, this project is part of the package proposals “Decision making and information acquisition in natural resource management”: the exchange with the PIs of remaining other three projects within that package will allow a proper modelling and analysis of the environmental, social, and economic issues that come with international treaties for environment.

This project has received funding from DFG, project No 542389523